What estate agents are saying about the new home market – The Irish Times

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When it comes to the residential new home market in Ireland, first-time buyers have a huge impact. Aided by government programs – the Help-to-Buy (HTB) incentive and the First Home Scheme (FHS) – coupled with an increase in accumulated savings during the Covid-19 pandemic, demand is high despite pressures rising cost of living. There is also new location flexibility among new owners and those who scale up or down as new hybrid working practices take hold. The problem for house hunters, however, remains the continued shortage of supply.

“The year to date has been dynamic from a new home market perspective,” says Ivan Gaine, managing director of new homes at Sherry FitzGerald, “it is clear that the weight of demand in the housing market exceeds enormously the offer”.

Ray Palmer-Smith, director of new homes at Knight Frank Ireland, says: “Since January, new home transactions have increased by 19% compared to the same period in 2021. This has been driven by purchases of a first buyers who rose 26%, with new home prices rising 7.7% in the year to the end of June.

Developments are still selling off plan with buyers keen to secure and trade a home up to six months ahead of expected completion for first-time buyers

— Ray Palmer Smith

Demand from first-time buyers is particularly strong in Dublin, Kildare, Meath, Laois and Westmeath, he says, adding: “Many buyers are now looking across multiple counties and are more open to buying depending on the house and the environment rather than the journey. .”

On the supply side, “new homes coming onto the open market continue to be limited and there does not appear to be a significant increase in inventory levels available for private buyers to purchase in the near future” , says Gemma Lanigan, partner at DNG New Homes. . There are two factors behind the shortfall, she says: “First, there are many new developments that are at an impasse in planning. In addition, developers and lenders prefer bulk sales over apartment developments, which also contributes to the dearth of new homes on the open market, especially new apartments which would be favored by single buyers or those who negotiate.

Inflation in construction costs also continues to contribute to a reduction in the number of new homes being built, says Judy Sorohan, associate director at Hooke & MacDonald. “The number of properties required on an annual basis remains high – around 50,000 – but we are only on track to deliver around half of them.”

David Browne, director of new homes at Savills, points to the number of ongoing judicial review proceedings against permits granted under the government’s fast-track planning or strategic housing development (SHD) process as another “significant factor hindering the offer.

He says: “While steps have been taken to try to resolve the issue, the negative impact this is having on specific markets is underestimated and is a real driver of the current supply crisis.” Planning density requirements must also be considered, he says, “with the prohibitive cost of delivery for apartments and duplexes affecting the viability of otherwise potentially strong projects – this is particularly the case for projects outside the Dublin region”.

According to Browne, alternative delivery models currently offered by homebuilders should be considered by policy makers.

“Some changes in density calculations and the adoption of design standards for low-rise to medium-density housing could have an extremely large impact, but we need to address these issues now,” adds Gaine.

Many first-time buyers wish to benefit from the highly appreciated HTB device and, therefore, the demand for new homes priced below €500,000 is particularly strong.

— Gemma Lanigan

Sorohan says many potential buyers were disappointed after not getting a new home in the first half of the year. However, she says, despite the rising cost of living, “with a higher number of new homes expected in the coming weeks, I think many buyers will still be keen to buy ahead of the rate hikes.” expected interest”.

“Regions such as Kildare, Meath and Wicklow are still seeing good activity and demand where people continue to take a work from home/hybrid approach with early autumn launches already seeing rapid sales” , she says.

Rising interest rates and inflation represent “a serious headwind for the market,” according to Palmer-Smith. “And while they will have a dampening effect on demand later this year and next year, we believe their impact will be mitigated by a combination of significant household savings, improving debt-to-disposable income ratios, of high net worth, as well as homebuyer supports such as Help-to-Buy and First Home programs,” he says.

New real estate agents agree that prices should continue to rise, but at a more moderate pace than in recent times.

Government must do the math based on new demographic and employment data and plan for more than 50,000 homes

— Ivan Gaine

“The cost of borrowing is rising sharply, albeit from historic lows, while the cost of living crisis is impacting savings available for deposits,” says Browne. “While we expect demand to remain strong, both factors point to a moderation in house price inflation from last year’s double-digit growth rate.”

Waiting lists for new homes in subdivisions continue to grow, Lanigan says, with more buyers joining the market daily. “For each new home in a program that is to be launched, we could have several ready-made buyers registered as interested and already approved for the loan,” she says.

“Developments are still selling off-plan with buyers keen to secure and trade a home up to six months ahead of expected completion for first-time buyers and 12 months for downsizers,” says Palmer-Smith.

With a higher number of new homes expected in the coming weeks, I think many buyers will still be keen to buy ahead of the expected interest rate increases.

— Judy Sorohan

Agents have seen the effect that the Help-to-Buy (HTB) and First Home (FHS) programs have had in increasing the number of first-time buyers entering the market. The HTB Incentive is a government tax refund designed to help first-time buyers get the deposit they need to buy a newly built home. Prospective buyers can borrow up to 10% of the purchase price of a new or self-built property up to a maximum of €30,000 for properties valued at €500,000 or less. A total of 24,827 putative buyers applied for the program this year, according to Revenue.

“Many first-time buyers want to benefit from the popular HTB system and therefore the demand for new homes priced below €500,000 is particularly strong,” says Lanigan. “However,” she adds, “we have seen first-time buyers forgoing the HTB scheme for the right house in the right location priced above the threshold.” The program has only been scheduled until the end of 2022, and the industry is eager to see if the government will extend the program in this year’s budget, notes Gaine.

Another buyer support for first-time buyers of new homes, announced in July 2022, is the First-Home (FHS) scheme. FHS is an equity plan in which the government takes a stake in the new home in exchange for a percentage of the price of the property. First-time buyers can receive up to 30% of the value of their home, or up to 20% if they also take advantage of the HTB incentive.

“The new equity investment scheme will certainly help close the affordability gap for many,” says Browne, “enabling a significant cohort of the population that has been left out of the market to buy their new home.” Lanigan points out that giving more people the option to buy will free up “much-needed” rental housing.

The new shared capital program will certainly help close the affordability gap for many, allowing a significant cohort of the population that has been left out of the market to buy their new home.

— david browne

In Co Dublin, for example, Sherry FitzGerald recently sold 30 new homes at Graydon, a Cairn Homes development in Newcastle, on the weekend of its launch, mostly to first-time buyers, many of whom are taking advantage of the FHS, said the agent.

It should be noted that there are price caps on FHS-eligible properties depending on the county or city where they are located.

Many buyers looking to trade up or down are also joining the new home market, Lanigan says, because of their A Ber rating and the lower running costs that come with it: “That has always been a factor, but due to the current rise in the cost of living and, in particular, energy costs, it is now more relevant than ever.

International and expat buyers have returned to the new home market, Palmer-Smith notes, as the population grew at its fastest pace since 2008, rising by 88,800 in the year to April.

“The government needs to do the math based on new demographic and employment data,” says Gaine, “and plan for more than 50,000 homes in the private, public and rental sectors.

“To deliver anything that comes close to these goals, a review of the national planning framework is needed, to ensure there is enough land available.”

Sorohan said: “The last quarter of 2022 is looking interesting. Opinions differ on where the market is headed, but I think we would all appreciate a bit of stability. »

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